On 27 February 2020 the Russian Supreme Court denied leave to appeal with regard to a judgement of the Moscow District Arbitrazh Court (court case no. А40-153265/2019) which reversed the decision of the lower court to annul the arbitral award based on the reasoning that one of the arbitrators had been excluded from the recommended list of the arbitration institution administrating the arbitral proceeding.
Atlantic Hermes Shipping Limited, Marshall Islands, applied to the Moscow Arbitrazh Court seeking enforcement of an arbitral award in an amount of USD 1 million rendered under the rules of the Maritime Arbitration Commission at the Chamber of Commerce and Industry of the Russian Federation (MAC). In parallel the respondent – Russian insurance company Soglasie – applied for setting aside of the said award. The court consolidated both applications in one proceeding.
The court of the first instance decided in favour of the respondent. It annulled the award and refused its enforcement on the ground that the arbitrator nominated by the claimant had been excluded from the recommended list of arbitrators of MAC after the proceedings had been commenced and the respondent had not been notified thereof. The court held that these irregularities violate the principle of the parties’ procedural equality and the principal of independence and impartiality of arbitrators, which is contrary to the Russian public order.
However, the court of the second instance – the Moscow District Arbitrazh Court – after reviewing the aforementioned judgement took the claimant’s side and overturned the first instance judgement. The court held that: (1) the recommended list of arbitrators is not mandatory for the parties and they are not limited by it when they nominate an arbitrator; (2) there is no obligation to notify parties about exclusion of one of the arbitrators from the recommended list. The respondent furthermore lost its right to raise objections before the state court since no argument had been made within the course of the arbitral proceedings. As a result, the court terminated the set aside proceedings and ordered the retrial of the claimant’s enforcement application which was ultimately granted.
The respondent applied to the Supreme Court which upheld the decision of the Moscow District Arbitrazh Court and denied leave to appeal. In its reasoning the Supreme Court confirmed that in the case at hand the respondent shall be estopped to raise the objections which it had not asserted during the arbitral proceedings. The outcome of the case is undoubtedly arbitration friendly in nature. It may be the case that the Supreme Court applied its new approach to arbitration proclaimed in its recent Resolution of 10 December 2019, which we have commented here https://kdb.legal/en/key-takeaways-from-the-recent-russian-supreme-courts-resolution-on-arbitration/.